Houses of Horror

March 17, 2017 Sam Saggers

We don’t often think of homes as having a “reputation”, but they do.

Consider, for example, the home at 6 Collins Street, North Ryde in New South Wales.

The former home of Sef Gonzales and his father, Teddy, mother Mary and sister Clodine was the subject of litigation in 2005 after a Buddhist couple – prospective buyers – learned of Sef’s brutal attack on his family.

The result of said litigation led to fines being levied against the agent for not disclosing the home’s history (reputation) to their clients.

Another buyer – who was told of the murders – was able to snap up the property for $80,000 less than it was initially listed for.

Did the home’s reputation lead to a lower value?
It certainly seems to be the case as there is nothing to indicate any other reason for the loss in value.

6 Collins Street, North Ryde

Property and Emotions

As property investors we realise that emotions cannot play a part in our decision to purchase real estate. We focus on the numbers, asking ourselves will I make a profit if I buy?

That said, there are situations where we do want to pay attention to the emotional side of real estate:

Selling

When we want to sell a home we do our best to appeal to the emotions of prospective buyers. We want them to fall in love with the home so we pay attention to aesthetics; pleasing colours, lighting, even smell can play a part in our sales strategy.

Buying

Another emotional situation we must consider is what could happen to our asset when purchasing a home that has a “reputation”.

Emotions and Property Values

Described as the “Appraiser of Doom” and the “Master of Disaster”, famous appraiser and consultant Randall Bell, has valued thousands of properties with bad or evil “reputations”.

Unfortunately, at least from a human perspective, business has been good.

The problem surrounding murder and/or suicide houses stems from individuals’ perception of the events that took place in them, not the property in and of itself.

Says Bell,  “Stigma is intangible, but it’s very real. It’s been recorded over and over again.  You can bulldoze the property, but the stigma attaches to the land.”

Bell maintains that a homicide in a home can extend the time it takes to sell by 3 months to 2 years and the price can be slashed by 15 to 25%.

Most individuals, however, understand if someone dies in a home due to natural causes. It’s the suicides and homicides that give people pause.

Add money and celebrity to the mix and you’ve got a big impact to a property’s worth according to Bell. Some examples:

  • Nicole Brown Simpson’s family were unable to sell the home where she and O.J. lived for two years when it should have taken only two months. They also reduced the price by $70,000 to make the sale.
  • The investor who rented out the Heaven’s Gate mansion (where 39 cult members took their own lives) had to return the home to the bank. The home was bulldozed by the new owners and a new home built in its place.
  • The Jose and Kitty Menendez mansion, scene of their gruesome murders by sons, Lyle and Erik took more than 2 years to sell when similar homes were selling in 6 months to a year. It also sold 25% below market value at $3 million.
Emotions and Property Values

Dealing With The Stigma

Simply destroying a structure – such as the McDonald’s franchise in San Ysidro where James Huberty took the lives of 21 people in 1984, doesn’t immediately remove the stigma surrounding a property’s reputation.

It takes time.

According to Bell, it can take as many as five to seven years for the stigma to fade.

He advises owners of these unfortunate properties to rent them out and wait until memories of the events dim and then try to sell.
This can take longer in more rural locations, however in urban environments a good discount will often encourage a buyer to make an offer.

McDonald’s franchise in San Ysidro

Finding Opportunity

So what should you, as a property investor do when you’ve got the opportunity to buy a property which has been the location of a violent death?

It depends.

Know what you plan to do with the property. If you want to renovate and then flip the property you might be disappointed in your returns.

If, however, you plan to hold onto the property for some time, you are likely to make a profit if the market is good and a good bit of time has passed since the incident took place.

While you very likely can make a profit when purchasing a “house of horrors”, you can also sometimes profit as a seller too.

For example, the apartment house where famed cannibalistic killer Jeffrey Dahmer ended the lives of 17 men and boys was purchased for a premium price. A redevelopment group had to revitalise the neighbourhood, so they purchased the property and tore it down.

“That’s an example where someone profited from a horrible crime scene,” said Bell. “That’s the exception to the rule, but it can happen. It did happen.”

3 Simple Retirement Questions People Often Fail To Consider

by | Apr 10, 2017

You didn’t buy your first investment property without a plan, so why should your retirement plans be any different? Retirement planning - in terms of financial concerns - should definitely be a part of building your investment property portfolio, but it takes much...

5 Tips for Building Wealth through Property Investing

by | Apr 7, 2017

What does financial freedom look like to you? You could ask a hundred people this question and you’d get back perhaps a hundred different answers. If, however, you were to dig deeper you’d discover that “control of my time” is the common theme. To achieve true...

5 Property Investing Reminders for Every Investor

by | Apr 3, 2017

When we first start out investing in houses we know that we have a lot to learn so we focus a great deal of our effort towards learning how to invest in property. After time, however, when we’ve been at a it a while and we’re living our day to day lives, it’s easy to...

How 5 Personality Types Manage Their Money

by | Mar 29, 2017

You realise that your personality has an influence on your relationships with others, but have you ever considered how it impacts the way you look at, and manage, money? Take a look at the following personality types. Individuals don’t have to fall squarely within one...

How To Profit From Subdivision

by | Mar 27, 2017

If you’ve been investing for any length of time you likely will have heard that property investing “takes time” and that you should exercise patience while waiting for capital growth to increase your wealth. Although this is true, it’s only partly true. Yes, it does...

Which Property Type Should I Choose?

by | Mar 24, 2017

Different property types deliver different results. The property type you choose will depend upon a number of factors.: Your personal risk profile - how much risk you’re comfortable with Your financial capacity What stage of growth you’re in When you expect or need to...

10 Common Tax Mistakes Made by Property Investors

by | Mar 22, 2017

Property investing is a tried and true means of wealth building that delivers benefits to investors in terms of capital growth and tax reduction. While we have no real control over investment property gains we do have control over what we claim on our taxes....

Are You Making One of These 5 Common Budget Mistakes?

by | Mar 20, 2017

Budgeting, together with saving is the foundation of every successful wealth creation plan. If you don’t know where your money is going, and if you’re not diligently saving it, you’ll lack the resources to build a comfortable future for yourself and your loved ones. A...

Houses of Horror

by | Mar 18, 2017

We don’t often think of homes as having a “reputation”, but they do. Consider, for example, the home at 6 Collins Street, North Ryde in New South Wales. The former home of Sef Gonzales and his father, Teddy, mother Mary and sister Clodine was the subject of litigation...

The post Houses of Horror appeared first on Positive Real Estate.

Previous Article
Are You Making One of These 5 Common Budget Mistakes?
Are You Making One of These 5 Common Budget Mistakes?

The post Are You Making One of These 5 Common Budget Mistakes? appeared first on Positive Real Estate.

Next Article
Pets: Should You Allow Them In Your Investment Property?
Pets: Should You Allow Them In Your Investment Property?

The post Pets: Should You Allow Them In Your Investment Property? appeared first on Positive Real Estate.